The Gross Profit Margin Ratio Is Calculated by Dividing

question 19

Multiple Choice

The gross profit margin ratio is calculated by dividing

• A)profit by sales revenue
• B)profit by shareholder's equity.
• C)gross profit by sales revenue.
• D)sales revenue by cost of sales.

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Definitions:

Leverage Ratios

Financial ratios that measure the extent to which a firm uses debt as a source of financing and its ability to service that debt.

Financing

The process of providing or obtaining the funds necessary for an investment, project, or business venture.

Debt

An amount of money borrowed by one party from another under the condition that it is to be repaid, usually with interest.

Net Profit Margin

A profitability ratio that measures the percentage of each sales dollar that remains as profit after all expenses, including taxes, have been paid.